Episode #3 Preview – All Prices are Contextual

The Second Law of Marketing: All Prices are Contextual

July 18, 2014

On our July 11th show we discussed The First Law of Marketing: The Value of Value. The Second Law of Marketing – that all prices are contextual – is just as critical to help your organization communicate value, and help convince your customers to pay for that value.

Most customers are not price sensitive; they are value conscious. So how can you communicate value, rather than simply competing on low price? One of the most customer-centric strategies your company can deploy is to offer an array options to your customers. Customers prefer options, especially in today’s world where they face a plethora of choices regarding who, when, what, and how to patronize a business. We simply must get over the false idea that there is one optimal price for a customer. There is a range of optimal prices, commensurate with the value being created.

We will also discuss Goldilocks pricing, along with the Anchor and Framing Effects involved in pricing.

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And meanwhile, on the Beeb…

Gucci HandbagLying in bed last night having a listen to the World Service on the BBC (as you do when you’re an exciting accountant), I happened across a very interesting program on pricing.

Being a rampant technophobe, after about 5 minutes, a link to the broadcast was sourced and it is available here.

I recommend you have a listen to it as there are some worthwhile observations through the broadcast – particularly when it comes to Gucci pricing their new handbag. It may surprise some readers to find out that the cost of manufacture had little (nothing) to do with eventual sales price which was set by the customers! The reporter on the job seems to take some umbrage at this, however the earnest Gucci rep explains it quite simply.